Delhi High Court
Municipal Corporation Of Delhi vs Pragati Builders And N.R.D.C. Of India ... on 13 May, 1991
Equivalent citations: AIR1991DELHI212, 45(1991)DLT264, 1991(21)DRJ88, AIR 1991 DELHI 212, (1991) 2 RRR 325, (1991) 21 DRJ 88, (1991) 45 DLT 264
JUDGMENT Mohd Sharmim, J.
(1) This writ petition and appeal raise a very interesting and important question of law as to whether the cost of a Lift installed in a building is to be taken into account while fixing the Rateable Value of a building ? The next pertinent question which falls for decision is as to whether in case of a building which has been constructed at various stages and at different periods of time, the cost of land is to be apportioned and the satire cost of land cannot be taken into consideration at the first instance while determining the Rateable Value of the building ?
(2) Civil Writ Petition No. 3281 of 1989 arose out of the judgment and order dated 5th March, 1989 passed by Shri S.C. Mittal, learned Additional District Judge.
(3) Learned lower court was of the view that the cost a of lift could not be taken into account while fixing the Rateable Value of a building, i.e. the property bearing No. C-15, JanakPuri, New Delhi. He was further of the opinion that the cost of the entire land could not be taken into account while determining the Rateable Value with regard to the basement, ground floor and mezzanine floor of the aforesaid property. According to him only the proportionate cost of the land for these portions could be taken into consideration while fixing the Rateable. Consequently, be set aside the impugned order of the assessment dated 30-6-1987 passed by Shri M.P Srivastava, Deputy Assessor & Collector. Aggrieved and dissatisfied with the said judgment and order the Municipal Corporation of Delhi have approached this court through the present writ petition.
(4) Similarly, -Municipal Corporation of Delhi (hereinafter to as appellant for the sake of convenience) have challenged the legality and validity of the judgment and order date 8-1-1988 passed by a Single Brother Judge of this court, i.e, Hon.'ble the Chief Justice Yogeshwar Dayal (as his Lordship then was and now Hon'ble Mr. Justice Yogeshwar Dayal of Supreme Court) through the present Lpa No. 28 of 1988, whereby he upheld the judgment and order passed by Shri B.C. Chaudhary, Additional District Judge and refused to set aside the same. He came to the conclusion that a lift was something which was not attached to the earth. It was simply an additional amenity provided in the building. Hence, it can not be taken into account while fixing the Rateable Value of the land building.
(5) We propose to dispose of the above writ petition and the impugned appeal together as the common questions of law and fact are likely to arise while disposing them of.
(6) Learned Counsel for the appellant Mr. Pradeep Nandrajog has vehemently contended that the definition of the word 'building' as given in Section 2(3) of the Delhi Municipal Corporation Act is wide enough to include within its ambit a lift' which is nothing but a structure made of metal. According to him the learned Single Judge failed to appreciate that as per bye-law No. 3 Explanation I of the Bye Laws. 1959 the Rateable Value of a building includes, "such other fixtures and furniture as are considered necessary for the sie and enjoyment of the land and the building for the purpose for which they are intended to be used." A lift is very much a fixture necessary for the use and enjoyment of the building It is permanently fastened and attached to the earth. The concept of land as given in the Delhi Municipal Corporation Act is very much akin to the concept of land as prevalent in England. It is based on the maxim 'Whatever is affixed to the soil becomes part of the soil.' A lift consists of a cage, a machinery, pulley, weight and Motor. This entire equipment is permanently fastened within the well which is embedded in the earth. ..
(7) It has then been urged for and on behalf of the appellant that where a building is constructed in different phases and at different stages, the cost of the entire land at the commencement of the first phase of construction has to be taken into account as per the law laid down by the Supreme Court. Thus the learned lower court fell into a grave error by coming to the conclusion that in case of a building which was constructed at different periods only proportionate cost of land is to be taken into consideration while fixing the Rateable Value.
(8) We could hear none for and on behalf of the respondents as none appeared on their behalf.
(9) Section 113 of the Delhi Municipal Corporation Act deals with the levy of taxes (hereinafter referred to as the Act for the sake of brevity). Section 114 of the Act confers power on the appellant, to impose property taxes on lands and buildings in Delhi.
(10) The term "building" has been defined under Section 2(3) of the Act in the following words, " 'building' means a house, out-house, stable, latrine, urinal, shed, hut, wall (other than a boundary wall) or any other structure, whether of masonry, bricks, wood, mud, metal or other material but does not include any portable shelter."
(11) , Section 2(24) of the Act which deals with the term land runs as under, " 'Land' includes benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by law over any street."
(12) It is manifest from above that the property tax if to be levied on a land of building. Now the question which comes to the tip of the tongue is as to whether the case of a lift falls within the domain of a building or land as defined in the Act. If it is so then it is liable to be taxed.
(13) A close scrutiny of the definition of the term 'building' reveals that it includes within its purview not only a house or a shed bat even a wall or any other metal. In order to install a lift in a building one has to raise a four walled structure with a roof over it. This in common parlance is known a cage or a well of the lift. The lift operates in the said cage or wel!. It further consists of chains, straps which operate as a pulley on wheels which arc permanently attached to the roof of the wall. Thus we are of the view it is positively a structure which squarely falls within the definition of a building.
(14) There is another aspect of the matter. We have already observed above that a lift can be installed in a building within a well or cage. Thus one has to raise a permanent structure consisting- of 4 walls with a roof over it for the operation of a lift. Besides that it also requires certain other things such as chains, straps which operate as a pulley on wheels which arc permanently attached and fastened to the roof. Hence, the said structure becomes a part and parcel of the building. Thus it is so to say a permanent fixture which can cot be removed from the said building without causing of damage to the same. It is well known that anything which is affixed to the soil becomes a part and parcel of the same. It is based on the maxim quicquid plotter solo, solo edit (Whatever is affixed to the soil belongs to the soil . Further more, the above concept finds also mention in the definition of the land as defined under section 2(24) of the Act, It includes within its ambit "things attached to the earth or permanently fastened to anything attached to the earth." Admittedly, a lift is something which is attached and permanently fastened to the earth. Consequently we feel that the case of a lift would be also coveren. by the definition of the `land` alluded to above.
(15) Learned counsel for the appellant has then led through Municipal Bye Law (3) Explanation (1) of the Assessment List Bye Laws, 1959. Bye-law No. 3 Explanation (1) reads as uader, "to the purpose of clause 'B' Rateable Value of the building includes Rateable Value of the land and the building thereon and such other futures and furnitures as are considered necessary for the use and enjoyment of the land and building for the purposes for which they are intended to be used, but save as aforesaid. no account shall be taken of the value of any fixtures or furniture contained or situated in or upon any such land or building''.
(16) It is fully manifest from the above that fixtures or furniture in a building which is considered necessary for the purposes for which it is intended to be used would be considered as part of the said building and this would be taken into consideration at the time of determination of the Rateable Value. Admittedly, the lift is something which is quite necessary for the use and enjoyment of a building and for the purpose for which it is intended to be used. The impugned building admittedly in the instant cases being used for residential purposes. A lift in the said building has been installed for the use of the occupants of the said building. They use it for the purpose of in gross and engross to the said building Hence, the lift is there for the better enjoyment of the said building. Judged by that standard also we feel a lift is to be taken into consideration for the purpose of assessment of the property tax of the said building.
(17) A question very much akin to the question in hand also arose and was decided by a division bench of Bombay High Court in a case entitled Poona Municipal Corporation v. Shankar Ramkrishan Jahade, (60 Born. L. R. 25). The question there was, as to whether certain furniture affixed in a Cinema theatre formed part of the building so as to be included in the cost thereof for assessment of Rateable Value.
(18) It was opined, "On the other hand you may have furniture which again to use an English Legal expression, may become fiuture which may be in the building not for the purpose of enjoyment of the furniture as such, but which would be, there in order that the use of the building should be better enjoyed. Therefore, in deciding whether furniture falls in one category or the to her, we agree with Mr. Kotwal, and that is what the decisions lay down as we shall presently point out. that the two tests that we have to apply are one the nature and the extent or degree of annexation to the property and the other is the object, intention or purpose of the annexation." The above, view was also given vent to in a book "The leading cases on the law of Rating (1963 Edition) by Mr. Edward Jackson on page 302; "Now, I apprehend that the premises to be rated are to be taken as they are with all their fittings and appliances by which the owner has adopted them to a.particular use, and which would pass as part of the premises by a demise of them to a tenant wherever the things have become so far as part of the premises that they would pass by a demise of those premises, they would form a part of the rateable subject to the inheritance for the purpose of rating." The learned author adverted to above has then observed the following on page 303 of the above said bank: "I believe the rule really to bs that things which are on the premises to b3 rated, and which are there for the purpose making and which make the premises fit as premises for the particular purpose for which they are used. are to bs taken into account in ascertaining the rateable value of such premises."
(19) The above question with regard to the determination of the rateable value also came up for interpretation in London County Councils v. Wilkins reported in (1955) 2 Q, B. P. 653. It was observed, "It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz. the degree of annexation and the object of the annexation. When the article in question is no further attached to the land then by its own weight, it is generally to be considered a mere chattel." But even such chattel can become part of the structure depending on intention. It was further opined in the above said case. But even in inch a case, if the intention is apparent to make the articles part of the land, they do become part of the land, thus blocks of stone placed on the top of one another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones in a builder's yard and for convenience sake staked on the top of each other in the form of a wall, would remain chattels." To the same effect are also the observations of Lord Denning M.R, as reported in London County Council v, Wilkins (Valuation Officer). (1956) All England Reporter P. 38, "The correct proposition roads is that, although a chattel is not a rateable hereditament by itself, nevertheless it may become rateable together with land, if it is placed of land and enjoyed with it in such circumstances and with such a degree of permanence that the chattel with the land can together be regarded as one unit of occupation."
(20) The above view was also reiterated by the High Court of Bombay, There was a question before the Hon'ble High Court of Bombay as to whether an air conditioning plant in a building was a pan of the building was a part of the building and as such assessable to the property tax ? The above question was decided in the affirmative in Appeal Nos. 617. 618 of 1971 in Municipal Corporation of Great Bombay v. Hindustan Lever Pvl. Ltd. on 19/27-4/1979, It was observed, "It is not disputed that the air-conditioning arrangement has enhanced the utility of the building. The entire machinery is installed therein, with prior inseparable structural arrangements for the better enjoyment of the building itself. It is difficult to conceive of any mode of enjoyment of the machinery, apart from its use for cooling the structure."
(21) We can cull from the above discussion the following points which are to be kept in mind while determining the rateable value of a building : (A)Has the machinery installed in a building become part of the said building on account of some degree of annexation ? (b) Is the said machinery so annexed to the building for its better enjoyment and enhancement of its utility ? (c) Whether any hypothetical tenant would be ready to occupy the said building with all its available facilities and amenities ? (d) What reasonable return a tenant would be called upon to pay on the total investment of the owner for raising such a building along with all its annexures and fixtures so as not to exceed its standard rent ?
(22) It can be safely concluded from above that in case a machinery is so annexed to the building that it has become a part thereof, and it is there for its better enjoyment, in that eventuality it is to be taken into account for 93 the determination of its rateable value We are thus of the view, from the conspectus to the above authorities that a lift is very much a part of the building and thus is to be taken into account for fixing the rateable value.
(23) This brings us to the next question, i e, with regard to the quantum of the cost of land which is to be taken into account at the time of the assessment of the rateable value.
(24) Admittedly, the assessed in the instant case raised the impugned construction on the land in two phases. During the first phase he covered a total area of 3056 Sq ft. They thereafter in the second phase covered a total area of 4044 sq. ft The covered area in this way came to 7100 sq ft The learned Additional District Judge was of the view that while determining the value of the first phase only proportionate cost is to be taken into consideration. The above view, we feel, is contrary to law as lay down by their Lordships of the Supreme Court in Dr. Balbir Singh v. M.C,P. . The market value of the land can not be added twice over once while determining the standard rent of the original structure and again while determining standard rent of the original structure and again while determining standard rent of the additional structure. Once the addition is made the formula set out in Sub-Section 1(a) (2) (b) and 1 (c) (2) of Section 6 can be applied only in relation to the premises as a whole. And where additional structure consists of a distinct and separate unit of occupation the standard rent would have to be apportioned in the manner indicated by ui in the earlier part of this.judgment. The about view was followed by a brother judge of this court, Hon'ble Mr. Justice B.N. Kirpal, in Express Newspapers Ltd. v. Municipal Corporation of Delhi . it was held "In the present case, therefore, the value of the land as in 1958 has to be added to the cost of construction of the old building. Therefore, the market price of a part of the same land as in 1978 when construction of the new building started can not be added to the cost of construction of the new building while determining the standard rent of the. said building." (para 38).
(25) The above view was again given vent to, by the Hon'ble Supreme Court in Common Cause Registered Society v. Union of India & Others reported as 32 (1987) D.L.T. 406 while declining the relief so the Municipal Corporation of Delhi, "this court had, therefore, normally indicated that when at different stage additional construction was raised on the property already valued, the market value of the land was not to be taken into account while fixing the valuation of the pre-existing construction." The Corporation did not challenge the correctness of the decision but only wanted clarification. Since the matter has been directly decided and there is absolutely no ambiguity, an application of this type on behalf of the Corporation does not lie.
(26) In the circumstances stated above we feel the appellants are entitled to succeed. Cmp No. 3281 of 1989 and LPA.. No 28 of 1989 arc allowed with coats. The judgment and order dated 5th March, 1989 passed by Shri S.C. Mittal, learned Additional District Judge and ihe judgment and order dated 8th January, 1988 passed by learned Single Judge of this court arc hereby set aside.